Environmental Alert
(by Kevin Garber, Jean Mosites and Varun Shekhar)
On February 13, 2020, the Pennsylvania Department of Environmental Protection presented its preliminary draft proposed rulemaking to establish a carbon dioxide budget trading program to the Air Quality Technical Advisory Committee (AQTAC). The proposed trading program would apply to fossil fuel-fired electricity generators of greater than 25 MW in Pennsylvania. The draft proposal reflects a first look at Pennsylvania DEP’s vision for a cap-and-trade program as directed by Governor Tom Wolf’s October 3, 2019 Executive Order 2019-07.
The draft proposed rule, although still in development, parallels the model rule prescribed by the Regional Greenhouse Gas Initiative (RGGI). RGGI is a coalition of 10 states in the Northeast and Mid-Atlantic that participate in a regional CO2 cap-and-trade program for fossil fuel-fired electricity generating units that have a nameplate capacity of over 25 MWe. Under the program, each member state has a budget of CO2 allowances, which it then allocates through set-aside programs, offsets, or periodic auctions. The number of allowances in each state’s CO2 budget that are allocated through auction varies widely among members. Each affected source (“CO2 budget sources”) is required to hold sufficient CO2 allowances based on its CO2 emissions as determined from continuous monitoring. Each allowance is equal to one ton of CO2 emissions.
States’ CO2 budgets, and in turn, available allowances, periodically reduce over time. This requires each CO2 budget source to either reduce CO2 emissions as measured by continuous monitoring, or obtain extra CO2 allowances to cover its emissions in excess of its allowance account. Under RGGI, auctions to obtain allowances generally occur quarterly, and may be open to qualified participants other than CO2 budget sources. The draft proposed rule explicitly mentions financial institutions and environmental groups as potential auction participants. The proposal specifies an annual rather than quarterly auction process.
Unlike the majority of RGGI state members, Pennsylvania DEP has indicated that it does not intend to seek legislative authority to implement a CO2 trading program, but rather, believes it has sufficient authority under the Pennsylvania Air Pollution Control Act. This position has been controversial, as some stakeholders contend that approval by the Pennsylvania General Assembly is necessary for such a trading program, including one that would involve other states. In November 2019, bills were introduced into the House (HB 2025) and Senate (SB 950) that would require General Assembly approval for any Pennsylvania carbon cap and trade program. This legal dispute is likely to give rise to significant ongoing challenges to the trading program rule.
Pennsylvania DEP’s draft proposed rule contains a number of differences from the RGGI model rule, most notably including:
- The proposed rule states that it is designed to reduce CO2 emissions “in a manner that is protective of public health, welfare and the environment and is economically efficient,” while the RGGI model rule only mentions economic efficiency in its statement of purpose. Numerous concerns were raised at the AQTAC meeting regarding the overall cost-effectiveness of the trading program, an analysis of which will be required under Pennsylvania’s Regulatory Review Act, Commonwealth Attorneys Act, and the Climate Change Act. Pennsylvania DEP indicated that it is still assessing costs and benefits of the trading program. The overall economic impact of the regulation will be a critical issue to a variety of stakeholders as the rulemaking progresses.
- The draft proposed rule does not require the establishment of multi-state allowance auctions, as performed within RGGI. Rather, the draft proposal would give the Pennsylvania DEP discretion to hold auctions only within Pennsylvania if it determines, among other things, that its participation in a multi-state auction process would not provide more benefits than costs to Pennsylvania versus a statewide auction. There is no established timeframe in the draft proposed rule for Pennsylvania DEP to determine which approach it will take.
Pennsylvania DEP is operating on an accelerated timeframe to initiate and ultimately finalize the CO2 budget trading program rulemaking. It intends to present a proposed version of the regulation to AQTAC in April 2020, at which point the Committee will vote on whether to advance the proposal to the Pennsylvania Environmental Quality Board. Pennsylvania DEP anticipates submitting the proposal to the EQB by July 2020 as required by Executive Order 2019-07. Assuming the EQB votes to adopt the regulation as a proposed rulemaking, public comments will be solicited in fall of 2020, and the final rulemaking could be promulgated by fall 2021. The Pennsylvania DEP expects the regulation to be effective in the first quarter of 2022.
Owners and operators of fossil fuel-fired electricity generating units greater than 25MW will be directly affected by the CO2 budget trading program rulemaking if the rule is adopted in its currently-proposed form. In addition, the energy industry, manufacturers and consumers in general, are likely to be affected by the rulemaking based on the potentially far-reaching impacts to the nature of energy generation within Pennsylvania and regionally. Babst Calland’s Climate Change attorneys are closely following this rulemaking. If you have questions about the proposed CO2 budget trading program, please contact Kevin Garber, Jean Mosites, or Varun Shekhar.
Click here for PDF.
Pipeline Safety Alert
(by James Curry, Keith Coyle and Brianne Kurdock)
On February 12, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA or Agency) released a final rule establishing new safety standards and reporting requirements for underground natural gas storage (UNGS) facilities (the Final Rule). The Final Rule modifies regulations that PHMSA previously established in an interim final rule (IFR) to address a congressional mandate in the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (PIPES Act).
The Final Rule follows the approach taken in the IFR by incorporating the provisions in two industry safety standards for UNGS facilities by reference but eliminates the requirement to treat the permissive elements of those standards as mandatory. The Final Rule also makes other changes to the IFR, many of which respond to issues raised in public comments, a petition for reconsideration filed by several industry trade organizations, and a petition for judicial review filed by the State of Texas in the U.S. Court of Appeals for the 5th Circuit. Additional information about the Final Rule, which takes effect on March 13, 2020, is provided below.
Revised Approach to Non-Mandatory Provisions of API RP 1170 and API RP 1171
The Final Rule eliminates what was arguably the most controversial aspect of the IFR, i.e. the requirement to treat the permissive elements of two industry standards as mandatory. In the 2016 IFR, PHMSA incorporated API Recommended Practice 1170 Design and Operation of Solution-mined Salt Caverns Used for Natural Gas Storage (RP 1170) and Recommended Practice 1171 Functional Integrity of Natural Gas Storage in Depleted Hydrocarbon Reservoirs and Aquifer Reservoirs (RP 1171 or RPs, collectively) by reference. Like most industry standards, the RPs contain provisions that create mandatory obligations (“shall” statements) and non-mandatory permissive obligations (“should” statements). The IFR treated the “should” statements in the RPs as mandatory “shall” statements, unless an operator included an adequate technical justification in its operation and maintenance procedures justifying a deviation. Numerous commenters challenged the appropriateness of the should-to-shall conversion, and PHMSA eliminated that provision in the Final Rule. Accordingly, the Final Rule no longer requires operators to treat the RP’s permissive provisions as mandatory.
Modifications to Integrity Management Requirements
Consistent with the FAQs that PHMSA issued for the IFR, the Final Rule codifies a requirement that UNGS operators meet specific integrity management (IM) program elements.
Establish an initial written framework: The IFR required UNGS operators with facilities constructed before July 18, 2017, to establish a framework for IM by January 18, 2018. The Final Rule prescribes the specific elements for that framework, which must include:
- A general discussion or definition of risk management;
- Data collection and integration;
- Threat and hazard identification and analysis;
- Risk assessment;
- Preventive and mitigative measures;
- Periodic review and reassessment; and
- Recordkeeping.
PHMSA also codified the required elements of an operator’s IM plan. It must include:
- A plan for developing and implementing each program element;
- An outline of the procedures to be developed;
- Roles and responsibilities of UNGS facility staff assigned to develop and implement the procedures;
- A plan for training staff about the procedures and how they will be applied;
- Timelines for implementing each program element, including risk analyses and baseline risk assessments; and
- A plan for incorporating information gained from experience into the IM plan on a continuous basis.
Operators of depleted hydrocarbon or aquifer reservoirs constructed on or before July 18, 2017, must meet these enhanced IM requirements by March 13, 2021.
Extension of Section 8 of API RP 1171 to Solution-Mined Salt Caverns: The Final Rule extends the risk-management provisions of section 8 of RP 1171, previously only applicable to depleted hydrocarbon reservoirs and aquifer reservoirs, to solution-mined salt caverns. Under the IFR, operators of solution-mined salt caverns were subject to section 10 of RP 1170 to implement a “holistic and comprehensive approach to monitoring cavern integrity.” The Final Rule continues this requirement but PHMSA also applies section 8 of RP 1171 to these facilities “to the extent that they apply to the physical characteristics and operations of solution-mined salt caverns.” Operators of solution-mined salt cavern UNGS facilities must adopt and implement risk-management procedures by March 13, 2021.
Baseline risk assessments: PHMSA included the deadlines for baseline assessments from the FAQs in the Final Rule. Operators must complete baseline risk assessments of UNGS assets according to the following schedule.
- All reservoirs and caverns by March 13, 2024
- 40% of all wellbores, wellheads, and associated components, prioritized by highest risk by March 13, 2024
- The remaining 60% of wellbores, wellheads, and associated components by March 13, 2027
Periodic reassessments: Operators must conduct reassessments on a risk-based schedule, with a maximum reassessment period of seven years.
Recordkeeping: Operators must maintain records for the life of the UNGS facility in the same manner required by the IM programs for gas transmission pipelines, gas distribution systems, and hazardous liquid pipelines.
Reporting Requirements for UNGS Facilities
PHMSA clarified in the Final Rule that UNGS operators are not required to report routine maintenance activities to the Agency. Operators must notify PHMSA 60 days before new facility construction, all plugging and abandonment activities (regardless of cost), and construction or maintenance that requires a workover rig and costs $200,000 or more for labor, materials, and operations. The Final Rule also adds an emergency exemption when 60 days’ notice is not practicable. In this case, the operator must promptly respond to the emergency, notify the Agency as soon as practicable, and document the emergency and any reason for the delay in notification.
Under the Final Rule, operators of a salt cavern UNGS facility must now file safety-related condition reports when any malfunction or operating error causes a UNGS facility’s pressure to drop below its minimum allowable operating pressure. However, the Final Rule exempts operators from reporting safety-related conditions where a wellhead is isolated and the reservoir or cavern and all other components continue to operate normally without a pressure reduction.
Definition of Underground Natural Gas Storage Facilities
The Final Rule modifies the definition of “underground natural gas storage facility” to better demarcate the line between a UNGS facilities subject to the Final Rule and surface gas pipeline facilities that are subject to other sections of Part 192. First, PHMSA considers a UNGS facility “to include all components up to the valve assembly (and their flanges) that route gas at the wellhead to or from the connected pipeline(s).” Second, the Final Rule clarifies that UNGS facilities are subject only to 192.12.
The States’ Role in Enforcing the UNGS Rule
The Final Rule affirms the well-established principle that states may impose additional requirements on intrastate facilities so long as the state has a certification with PHMSA and the additional requirements do not conflict with the federal safety standards.
Operations and Maintenance Procedural Requirements
The IFR required operators to include procedures for operations, maintenance, and emergency response and management for UNGS facilities in the operations and maintenance manuals required for natural gas pipelines (49 C.F.R. § 192.605). The Final Rule simplifies the procedural obligation by not requiring operators to include UNGS procedures in the gas pipeline manuals. The deadline to develop these procedures for existing facilities remains July 18, 2017. An UNGS operator must maintain records necessary to implement the procedures and review them every 15 months, but at least once every calendar year. Under the Final Rule, operators must keep UNGS facility procedure manuals accessible at locations where UNGS facility work will be performed.
Click here for PDF.
The Legal Intelligencer
(by Alyssa Golfieri)
Zoning hearing boards have exclusive jurisdiction to hear and render final adjudications on nine discrete matters, ranging from substantive challenges to the validity of land use ordinances, to appeals from determinations of a zoning officer, to applications for variances and special exceptions from the terms of zoning and floodplain ordinances. See Section 909.1(a) of the MPC, 53 P.S. Section 10909.1(a). If a party to a land use matter is unhappy with a zoning hearing board’s final adjudication, he has 30 days to appeal the decision to the trial court. See Section 1002-A of the MPC, 53 P.S. Section 11002-A.
When rendering final adjudications, zoning hearing boards sit as fact finders. This means zoning hearing boards are the sole judge of the credibility of witnesses and the weight afforded evidence. See Tri-County Landfill v. Pine Township Zoning Hearing Board, 83 A.3d 488, 518 (Pa. Commw. Ct. 2014). As such, when a zoning hearing board’s decision is appealed to the trial court, the trial court should not, with one exception addressed below, engage in fact-finding or disturb the board’s credibility determinations. See Section 1005-A of the MPC, 53 P.S. Section 11005-A; see also Manayunk Neighborhood Council, 815 A.2d at 652 (Pa. Commw. Ct. 2002). Rather, the trial court must uphold a zoning hearing board’s determination so long as the board did not commit a manifest abuse of discretion—an abuse of discretion occurs only when a zoning hearing board’s findings are not supported by substantial evidence, which Pennsylvania courts have defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. See Berman v. Manchester Township Zoning Hearing Board, 540 A.2d 8, 9 (Pa. Commw. Ct. 1988); Hertzberg v. Zoning Board of Adjustment, 721 A.2d 43, 46 (Pa. 1988)—or an error of law.
The one exception to a trial court’s deferential standard of review is a circumstance where the trial court, upon motion by a party, concludes the zoning hearing board improperly excluded evidence. In such circumstances, the trial court may open the hearing record and accept additional evidence pursuant to Section 1005-A of the MPC, 53 P.S. Section 11005-A. Section 1005-A provides, in relevant part:
“If, upon motion, it is shown that proper consideration of the land use appeal requires the presentation of additional evidence, a judge of the court may hold a hearing to receive additional evidence, may remand the case to the body, agency or officer whose decision or order has been brought up for review, or may refer the case to a referee to receive additional evidence … if additional evidence is taken … the court shall make its own findings of fact based on the record below as supplemented by the additional evidence …”
To avoid its findings being disturbed on appeal, a zoning hearing board typically accepts all evidence presented before it, even when the evidence is arguably irrelevant. Then, when rendering its decision, the zoning hearing board uses its sole discretion to give the evidence the weight it deserves. While this practice does not eliminate a party’s right to request relief from the trial court under Section 1005-A, it does significantly limit the trial court’s ability to conclude a zoning hearing board improperly excluded evidence.
Since relief under Section 1005-A is rare, when a trial court does agree to take additional evidence, the next question often becomes—what is the trial court’s scope of review? Does the last line of Section 1005-A—“if additional evidence is taken … the court shall make its own findings of fact based on the record below as supplemented by the additional evidence”—mean the trial court must consider the entire matter de novo? What if the zoning hearing board rendered a decision on five, 10 or even 15-plus issues, but the trial court only takes additional testimony on one limited point? Under that scenario, should the trial court apply a deferential scope of review to the issues for which no additional evidence was taken? Before the Commonwealth Court’s July 29, 2019, decision in Sowich v. Zoning Hearing Board of Brown Township, 214 A.3d 775 (Pa. Commw. Ct. 2019), some argued that any time a trial court accepted additional evidence the court’s deferential standard of review transitions to de novo for all matters. The Commonwealth Court’s decision in Sowich clarified this is not, however, the case.
In Sowich, a landowner appealed a notice of violation to the Brown Township Zoning Hearing Board (the ZHB), challenging the township’s zoning official’s determination that the depositing, storing, and removing of fill, the grinding of stone, and the storing of concrete barriers on his property was not a legally nonconforming use. The ZHB upheld the zoning official’s decision in-part and overturned the decision in-part, finding the use of the property as a fill operation was a legally nonconforming use, but the crushing of stone and the storing of five or more concrete barriers was not. The landowner and several objecting neighboring property owners appealed the ZHB’s decision to the trial court.
On appeal, the landowner filed a motion pursuant to Section 1005-A to supplement the record on one limited point—whether the grinding and crushing of stone was an inherent part of the depositing, storing, and removal of fill activities. The trial court granted the landowner’s motion and remanded the matter back to the ZHB to take additional evidence. As instructed, the ZHB held a remand hearing and then forwarded the hearing transcript and exhibits to the trial court “for further proceedings.” The trial court then affirmed the ZHB’s decision. In doing so, the trial court applied a deferential scope of review to all matters, including the one for which additional evidence was accepted.
The landowner and objectors appealed to the Commonwealth Court, challenging, among other things, the scope of review applied by the trial court. The landowner contended that once the trial court accepted additional evidence, Section 1005-A required it to review the matter, in its entirety, de novo (i.e., the ZHB’s findings were no longer relevant or controlling). The Commonwealth Court disagreed.
Relying heavily on its previous decision in Cherry Valley Associates v. Stroud Township Board of Supervisors, 554 A.2d 149, 151 (Pa. Commw. Ct. 1989), the Commonwealth Court held, in relevant part, that a trial court’s decision to accept additional evidence, either itself or via remand to the zoning hearing board, does not automatically render the scope of review on all matters de novo. Rather, a trial court is required to make findings of fact on, and thus review de novo, only the limited point for which additional evidence was taken. Accordingly, a trial court should not disturb a zoning hearing board’s credibility determinations, the weight the board afforded the evidence or the board’s findings (so long as they were supported by substantial evidence) on matters for which no additional evidence is taken.
For the full article, click here.
Reprinted with permission from the February 13, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved.
Law firm Babst Calland will participate at the 2020 Smart Business Dealmakers Conference in Pittsburgh, Pa. on March 5 at Wyndham Grand Pittsburgh Downtown.
The conference will feature middle-market CEOs, top private equity and venture capital firms, major lenders and leading service providers participating in sessions that cover the breadth of the merger and acquisition landscape addressing such topics as buying a business, selling a business, financing a deal, liquidity events, merging operations, alternative investing and more.
Attorney Christian A. Farmakis will join a group of recognized entrepreneurs and business experts in discussing Transaction Audits: How to prepare your company for any type of deal.
For more information about the Dealmakers conference, or to register to attend, visit: https://www.smartbusinessdealmakers.com/pittsburgh//event/
Pipeline Safety Alert
(by James Curry, Keith Coyle and Brianne Kurdock)
On February 6, 2020, the Pipeline and Hazardous Materials Safety Administration (PHMSA) published a notice of proposed rulemaking (NPRM) in the Federal Register containing new valve installation and minimum rupture detection standards for gas and hazardous liquid pipelines. The NPRM would require the installation of automatic shutoff valves (ASV), remote-control valves (RCV), or equivalent technology, on certain gas transmission and hazardous liquid pipelines. The NPRM also contains proposed requirements for rupture detection and mitigation, including provisions for improving emergency response and conducting failure investigations and analyses. Public comments must be filed in response to the NPRM on or before April 6, 2020. Additional background information and a brief summary of PHMSA’s proposals are provided below.
Why Did PHMSA Issue the NPRM?
In 2010, a pair of significant pipeline incidents occurred in Marshall, Michigan, and San Bruno, California. The resulting NTSB investigations led to the issuance of safety recommendations relating to the use of ASVs and RCVs and other measures to improve rupture detection and response. Also, in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (2011 Act), Congress added mandates to the Pipeline Safety Act directing PHMSA to conduct studies and, if appropriate, establish regulations to address the concerns identified in NTSB’s safety recommendations. In the years following the 2011 Act, PHMSA commissioned the studies required by the congressional mandates and received separate recommendations from GAO on the need to improve pipeline incident response. PHMSA also issued two ANPRMs after the 2010 pipeline incidents asking for public comment on the need to amend the pipeline safety regulations for valve installation and rupture detection. All of these factors culminated in this NPRM.
What’s in the NPRM?
Valve Requirements
- Installation Requirements for New Pipelines: Pursuant to 49 C.F.R. § 192.179(a), the NPRM would require operators to install ASVs, RCVs, or equivalent technology, on all new natural gas transmission and hazardous liquid pipelines 6 inches or greater in nominal diameter, unless the operator demonstrates that installation of a manual valve is justified for reasons of economic, technical, or operational infeasibility. However, there are conflicting statements in the Preliminary Regulatory Impact Analysis covering the scope of the NPRM that may warrant clarification.
- Spacing Requirements for New Pipelines. For new natural gas transmission lines that meet or exceed the 6-inch diameter threshold, the valves would need to be spaced at the intervals provided in 49 C.F.R. §§ 192.179 or proposed 192.634, as applicable. For new hazardous liquid pipelines that meet or exceed the 6-inch diameter threshold, the valves would need to be spaced at intervals of 15 miles or less for pipeline segments that could affect high consequence areas (HCAs) and 20 miles or less for pipeline segments that could not affect HCAs. Additional spacing limitations apply to valves protecting HCAs as preventive and mitigative measures under the integrity management regulations, valves protecting certain water crossings, and valves on highly volatile liquid pipelines.
- Installation Requirements for Existing Pipelines: The NPRM would also require operators to install ASVs, RCVs, or equivalent technology, on existing natural gas transmission lines and hazardous liquid pipelines 6 inches
or greater in nominal diameter that are “entirely replaced”, unless the operator demonstrates that installation of a manual valve is justified for reasons of economic, technical, or operational infeasibility. The phrase “entirely replaced” is limited to situations where two or more contiguous miles of pipe are replaced with new pipe.
- Spacing Requirements for Existing Pipelines. Replacements of gas transmission lines that meet these criteria would need to have rupture mitigation valves spaced at intervals specified in 49 C.F.R. §§ 192.179 or 192.634, as applicable. New rupture-mitigation valve spacing intervals would apply to replacements of hazardous liquid pipelines that meet the criteria as well.
Requirements for Gas Transmission Lines that Undergo a Change in Class Location: The proposed rule states that if a change in class location requires a pipe replacement under the maximum allowable operating pressure regulations, the operator would need to comply with the proposed valve installation, spacing, and shut-off requirements applicable to the new class location. Any necessary valves would be required to be installed within 24 months of the class location change.
Other Requirements
In addition to the proposed valve installation and spacing requirements, the NPRM contains provisions for gas and hazardous liquid pipelines relating to valve shut-off time for rupture mitigation, valve shut-off capability, valve shut-off methods, valve monitoring and operation capabilities, valve shut-off status, valve maintenance, and use of ASVs, RCVs, or equivalent technology, as preventive and mitigative measures under the integrity management regulations.
Of note, PHMSA proposes to require operators to identify a rupture as soon as practicable but no longer than 10 minutes after initial notification or indication of a rupture. PHMSA also proposes a full rupture-mitigation valve shut off within 40 minutes of identification, including where manual valves are used. The NPRM also proposes response time validation and verification requirements and would establish remedial measures for inoperable valves.
Rupture Mitigation
- Definition of “Rupture”: The NPRM proposes to define the term “rupture” in the gas and hazardous liquid pipeline safety regulations for purposes of the new requirements to include certain events that involve an uncontrolled release of a large volume of gas or hazardous liquids. The definitions focus on the point when a release of gas, hazardous liquid, or carbon dioxide is first observed or reported to the pipeline operator and include events that result in unanticipated or unplanned changes in pressure or flow rate that exceed a specified threshold (10 percent or greater) during a specified time interval (15 minutes or less) or that are otherwise representative of these events. PHMSA notes that its use of the term “rupture” elsewhere in the regulations or the incident reporting forms does not refer to this specific definition.
- Emergency Response Plans and Post-Incident Analysis: The NPRM proposes to modify existing regulations for gas and hazardous liquid pipelines to include new provisions for interacting with 911 call centers and emergency response officials. PHMSA included similar provisions in the “Communication During Emergency Situations” Advisory Bulletin issued in 2012. Operators would be required to expand their procedures for investigating and analyzing incidents and accidents to identify and implement post-accident lessons learned and review ruptures involving the closure of rupture mitigation valves.
Areas for Potential Clarification
The NPRM raises many questions.
- How do the valve installation requirements for new pipelines interact with the existing valve installation requirements for replacements, particularly with respect to the various spacing intervals?
- Is the proposed 6-inch diameter threshold for the use of ASVs, RCVs, or equivalent technology, appropriate? What about the proposed 2-mile limitation for pipeline replacements? And the proposed 10-minute identification and 40-minute shutoff times for ruptures?
- Can PHMSA improve the organization and clarity of the proposed rule by defining “rupture mitigation valve” at the outset of the gas and hazardous liquid pipeline safety regulations?
- Are the requirements to perform annual validation drills for valves that will be manually operated reasonable?
- Has PHMSA quantified the benefits of the NPRM in accordance with its statutory mandate to do so?
What’s Next?
PHMSA is providing a 60-day comment period. The deadline is April 6, 2020, subject to PHMSA granting any requests for an extension. After the close of the public comment period, PHMSA will consider the information provided and decide whether to present the NPRM to the Pipeline Advisory Committees for consideration. The Pipeline Advisory Committees are 15-member federal advisory committees that review and provide non-binding recommendations to PHMSA on proposed changes to the pipeline safety regulations. Because the NPRM includes proposed changes to the regulations for gas and hazardous liquid pipelines, both of the Pipeline Advisory Committees (Gas and Liquid) would need to consider the proposals. Once that process is complete, PHMSA can develop a final rule for consideration by the Office of the Secretary and Office of Management and Budget and eventual publication in the Federal Register. At that point, any new regulations for valve installation and minimum rupture detection will have the force and effect of law, subject to any applicable effectives dates for the final rule and compliance deadlines for particular provisions.
Click here for PDF.
The PIOGA Press
(by Jean Mosites, Hannah Baldwin and Casey Snyder)
On December 28, the Pennsylvania Department of Environmental Protection published notice of a substantive revision to the Policy for Pennsylvania Historical and Museum Commission (PHMC) and DEP Coordination During Permit Application Review and Evaluation of Historic Resources (012-0700-001). The draft policy, if finalized, would replace Implementation of the Pennsylvania State History Code: Policy and Procedures for Applicants for DEP Permits and Plan Approvals, finalized in 2002 and amended in 2006, and establishes the framework DEP would implement for its plan approvals and permit application reviews to comply with Pennsylvania’s History Code, 37 Pa. C.S. §§ 101 et seq.
The History Code and its application to oil and gas operations
Under Section 507 of the History Code, Common-wealth agencies must notify PHMC before undertaking any Commonwealth or Commonwealth-assisted permitted or contracted project that affects or may affect archaeological sites and provide PHMC with information concerning the project or activity. DEP requires applicants to submit the State Historic Preservation Office (SHPO) Project Review Form to PHMC if their project potentially affects an archaeological site. After receiving the form from the applicant, PHMC must then determine whether the project may adversely affect an archaeological site.
Oil and gas operations potentially fall within the History Code’s consultation and survey requirements as “Commonwealth-assisted permitted projects.” Activities that require state permits, such as construction of well pads, pipelines, compressor stations and underground injection control wells, could have the potential to affect historic resources that come within the purview of the PHMC coordination requirements in the History Code.
Neither the History Code nor the draft policy mandates outcomes for known or discovered historic resources identified during the review process or during a survey or field investigation. If PHMC identifies potential adverse effects to archaeological resources that may result from the permitted activity, it will notify DEP and work to mitigate or minimize adverse effects.
Changes from the current policy
Under the History Code, Commonwealth agencies, including DEP, are required to institute procedures and policies to ensure their actions contribute to the preservation of historic resources. The History Code is procedural in nature and has a limited scope with respect to private properties and entities. Several of these limitations, provided in the current policy, have been removed from the draft policy.
For example, if PHMC deter mines a project may adversely affect a significant archaeological site―defined as “an area of land which contains extensive evidence of previous prehistoric or historic human habitation or stratified deposits of animal or plant remains or manmade artifacts or human burials”―PHMC may conduct or cause to be conducted an archaeological survey of the site. However, PHMC cannot require archaeological surveys or investigations on private property without the consent of the property owner and must pay for any surveys or investigations conducted on private property, unless the survey is required under federal law. For oil and gas operations, consent to conduct a survey or investigation may de pend on the surface landowner because the operator’s property interests are often in the subsurface by lease or fee rather than the surface. Permittees, however, may not interfere with a survey or investigation that is conducted within the time limits set by the History Code.
Increasing scope of and uncertainty in PHMC review
Both the draft policy and the current policy include a list of projects and activities exempt from completing the SHPO Project Review Form and, therefore, PHMC review. However, the two exemption lists are constructed very differently and new defined (and undefined) terms introduced in the draft policy make it unclear when and to whom the exemptions apply, likely resulting in more applicants submitting SHPO Project Review Forms and being subject to PHMC review for their projects.
The current policy exempts specific activities and permits by bureau, listing most by permit name (i.e. “individual well permit,” “Chapter 105 General Permit”). Many of the exemptions are conditioned on a 10-acre exemption; the permits are exempt from PHMC coordination if they involve no more than 10 acres of earth disturbance. Many permits or approvals required for oil and gas related activities, including well permits and waste management permits, are either categorically exempt or exempt under the current policy’s 10-acre exemption. However, any permitted activities that may affect an historic resource on the National Register of Historic Places are not exempt from coordination, regardless of size.
In contrast, the draft policy exemptions are listed by descriptions of the activity rather than by bureau and specific permit types, creating potential confusion regarding which activities require review. For example, activity exempt from PHMC coordination under the draft policy includes permits or approvals for ground disturbance within areas where documented prior ground disturbance occurred and permits or approvals where proposed activity will not affect above ground historic resources or archaeological resources 50 years of age or older. This exemption may be difficult to apply in practice.
The draft policy clearly expands reviews by removing the 10-acre exemptions and including all activities that may affect “significant above ground resources or significant archaeological resources listed on or eligible to be listed on the National Register of Historic Places” rather than those that might affect resources already listed on the National Register of Historic Places.
Early coordination and PHMC response categories
The draft policy adds a new section that encourages early coordination between PHMC and project applicants. The draft policy recommends that before completing the SHPO Project Review Form and submitting a DEP permit application, project applicants should review four sources of information on historic and archaeological resources: Pennsylvania’s Cultural Resources Geographic Information System, county historical societies, historic mapping, and county planning commissions and offices. While these resources are not necessarily new to project applicants, the emphasis on urging applicants to consult these resources during the planning stages of a permitted project is new. It is not clear if the use of early coordination will be an effective way to receive timely permitting decisions.
The draft policy also provides a new list of PHMC’s potential responses to a permittee’s SHPO Project Review Form. The list contains seven different responses, ranging from “no historic properties in the area of potential effect” to “the project may affect significant archaeological resources and it is the opinion of the SHPO that an archaeological survey should be conducted.” The draft policy provides a brief explanation of the circumstances under which a permittee would receive each type of response. Including these potential response types and the guidance on when each one will be issued further informs the review procedure for permittees but also increases the complexity of the response outcomes.
Looking forward
Public comments were accepted on DEP’s eComment website through January 27. Following public comment, DEP could move forward with finalizing the draft policy, issue a new draft or do nothing, leaving the current policy in place.
Click here for PDF.
The PIOGA Press
(by Lisa Bruderly and Kevin Garber)
On January 23, the U. S. Environmental Protection Agency and the U. S. Army Corps of Engineers pre-published the final Navigable Waters Protection (NWP) Rule, which (yet again) redefines the scope of waters regulated under the Clean Water Act (CWA). In particular, the final NWP Rule revises the definition of “waters of the United States” (WOTUS) in 12 federal regulations and will become effective 60 days after publication in the Federal Register.
Once effective, the NWP Rule will almost certainly be challenged in the courts by NGOs and other interested parties. These challenges could result in the courts staying the NWP Rule in some, or all, states while the lawsuits are litigated.
The NWP Rule is the final step in fulfilling the Trump administration’s promise to repeal and replace the Obama administration’s 2015 Clean Water Rule (CWR), which many believe improperly expanded the scope of waters regulated under the CWA. Effective December 23, 2019, EPA and the Corps repealed the CWR and restored the WOTUS definition that existed before 2015. Prior to the repeal, the pre2015 rule’s WOTUS definition applied in approximately half of the states, while the CWR’s WOTUS definition applied in the remainder (including Pennsylvania), resulting in certain states having more federally regulated waters than other states.
The stated intent of the NWP Rule is to provide “clarity, predictability and consistency” regarding CWA jurisdiction. Consistent with President Trump’s February 28, 2017, Executive Order, the NWP Rule heavily reflects and relies upon Supreme Court Justice Antonin Scalia’s interpretation of the pre-2015 rule’s definition of WOTUS, as expressed in his plurality opinion in the seminal case, Rapanos v. United States (547 U.S. 715 (2006)). Missing from the NWP Rule is any reference to the significant nexus test discussed in Justice Anthony Kennedy’s concurring opinion in Rapanos. As background, Justice Scalia opined that relatively permanent, standing or continuously flowing waters and wetlands with a continuous surface connection to such relatively permanent waters should be regulated under the CWA, while Justice Kennedy advocated for CWA jurisdiction for wetlands with a significant nexus to a navigable water (i.e., a significant effect on the chemical, physical and biological integrity of traditional navigable waters).
Scope of NWP Rule is narrower and clearer than previous rules
The NWP Rule consolidates jurisdictional waters into four categories: (1) territorial seas and navigable-in-fact waters; (2) tributaries; (3) lakes, ponds and impoundments of jurisdictional waters; and (4) adjacent wetlands. As expected, the WOTUS definition in the NWP Rule is much narrower and will federally regulate less waters than would have been regulated under the CWR. The NWP Rule also provides more clarity as to the scope of WOTUS than the pre-2015 rule. The NWP Rule includes 16 definitions and 12 exclusions, as compared to the five definitions and two exclusions in the pre2015 rule, including, for the first time, definitions to clarify the prior converted cropland and waste treatment system exclusions. The NWP Rule also categorically excludes, among other things, ephemeral streams and ditches without perennial or intermittent flow.
We note that despite attempts to provide clarity, the NWP Rule still contains terms that may be subjectively interpreted. For example, the rule relies on conditions in a “typical year” to determine whether a water meets the definition of an “adjacent wetland,” “lakes and ponds, and impoundments,” or a “tributary.” These determinations can be subjective because a “typical year” is determined by the “normal periodic range” of climatic conditions in a geographic area on a rolling 30-year basis.
Practical impact to Pennsylvania expected to be small
While the NWP Rule is intended to clarify the scope of federally regulated waters, the practical impact of the rule on the regulation of waters in Pennsylvania is expected to be small. Under Pennsylvania’s Clean Streams Law, “waters of the Commonwealth” broadly include “any and all rivers, streams, creeks, rivulets, impoundments, ditches, water courses, storm sewers, lakes, dammed water, ponds, springs and all other bodies or channels of conveyance of surface and underground water, or parts thereof, whether natural or artificial, within or on the boundaries of this Commonwealth.” Pennsylvania’s definition of “waters of the Commonwealth” is more expansive (i.e., includes more types of waters) than the NWP Rule’s WOTUS definition. Therefore, projects that are expected to impact, or discharge into, a water of the Commonwealth will still (typically) require state permitting, even though federal permitting by EPA or the Corps may not be required. There may also be implications in limited circumstances as to whether Spill Prevention, Control and Countermeasure (SPCC) plans would be needed for certain facilities.
In states with less expansive definitions of state waters, the NWP Rule is expected to be a more significant consideration for permitting and spill planning/ response.
Controversy continues and challenges anticipated
While many in industry and agriculture have supported the NWP Rule, a number of NGOs and other interested parties have signaled that they will challenge the NWP Rule on procedural and substantive grounds. In addition, the EPA’s own Science Advisory Board and other scientific organizations have criticized the NWP Rule as being in conflict with established science and the objectives of the CWA. With legal challenges looming, the NWP Rule may be stayed in some or all states, with the pre-2015 rule remaining the definition of WOTUS nationwide or in select states.
Click here for PDF.
The Legal Intelligencer
(by Stephen Antonelli and Andrew DeGory)
On Jan. 16, the U.S. Department of Labor (DOL) released a final rule updating its interpretation of “joint employer” under the Fair Labor Standards Act (FLSA). The update represents the first “meaningful revision” of its interpretation, codified at 29 CFR Part 791, since the FLSA’s inception in 1958. The final rule takes effect on March 16 and carries meaningful significance for companies that rely on temporary staffing and subcontractors and franchise owners. It could also allow companies to exert more influence over temporary workers without being considered a “joint employer.” While not binding on the federal courts, the final rule will serve as the DOL’s official interpretation moving forward and guide its enforcement of this issue under the FLSA.
The FLSA has always recognized that an employee can have two or more employers who are jointly and severally liable for the wages of its workers. The act requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek. The FLSA defines the term “employer” to “include any person acting directly or indirectly in the interest of an employer in relation to an employee.”
Part 791 recognizes two scenarios where an employee may have joint employers. In the first scenario, and most commonly, an employee performs work for an employer while another person or entity “simultaneously benefits” from that work. Thus, the employee only works one “set” of hours in a given week. In the second scenario, “one employer employs an employee for one set of hours in a workweek, and another employer employs the same
employee for a separate set of hours in a workweek.”
The DOL’s final rule primarily addresses the first scenario and adopts a four-factor balancing test derived from the U.S. Court of Appeals for the Ninth Circuit’s 1983 holding, Bonnette v. California Health & Welfare Agency. To determine whether a party is potentially a joint employer, the test analyzes whether the person or entity:
The DOL touts the four-part test as providing “necessary uniformity, clarity, and certainty for businesses.” Of crucial importance, the employer must have an “actual exercise of control” over one of the test’s four factors to be considered a joint employer. No single factor is dispositive in determining joint employer status, and the appropriate weight to give each factor will vary depending on the circumstances. Additionally, the DOL stated that maintaining the employee’s employment records alone will not establish “joint employer” status. Finally, the DOL provided that additional factors may be considered if they indicate that a potential joint employer “exercises significant control over the terms and conditions of the employee’s work.”
The new rule will not impact the second scenario above, as the DOL’s interpretation will not change and the agency will continue to evaluate the “relationship” between the two employers. If the employers are in fact joint employers in this second scenario, they must “aggregate” the employees’ hours to ensure compliance with the act.
During the commenting period for the proposed final rule, supporters and critics were divided along employer and employee lines, respectively. Commenters representing employers opined that the rule would bring clarity to the varying opinions in the federal courts. On the contrary, those representing the interests of employee groups asserted that the rule ignores existing Supreme Court and circuit court precedent and should not receive judicial deference moving forward. The DOL did acknowledge that the rule may reduce the number of joint employers and therefore employees “will have the legal right to collect” wages from fewer employers.
As part of its update, the DOL also provides illustrative examples of scenarios where a joint employer analysis would be necessary. As with the updated rule in general, employers “overwhelmingly supported” the inclusion of the examples, whereas employee supporters criticized them as “inadequate.” Regardless, the examples offer insight for how the DOL would enforce its interpretation in certain situations.
Going forward, employers should consider the following implications and
advantages of Part 791:
• Hiring and firing: In one of its illustrative examples, the DOL states that acompany’s single request of a staffing agency to fire a temporary employee does not constitute “indirect control” over hiring and firing. Based on this interpretation, a company relying on temporary workers to round out its workforce can feel more comfortable if faced with an independent contractor that it believes should be terminated. If, however, a company exerts control over multiple termination decisions, it is perhaps more likely to be determined to be a “joint employer.”
• Codes of Conduct: Under the new rule, the potential joint employer can require another employer to comply with a contractual code of conduct. The code can even include requirements to provide hourly wages higher than the federal minimum without exercising control over rate or method of payment. This offers companies a tool to influence their employers or suppliers without becoming a “joint employer.”
• Resources and benefits: The DOL stated that a potential joint employer may provide benefits, such as training, educational opportunities, and benefit plan options without impacting their status. Therefore, companies seeking to provide worthwhile resources and benefits to temporary employees should not hesitate to do so out of a fear of changing employer status.
• Avoiding excessive overtime: Subcontracted hourly workers—in particular those in the oil and gas industry—often log significant overtime at wages considerably higher than the federal minimum. Under these circumstances, the implications of “joint employer” status are magnified as the overtime calculation on a relatively high regular rate may result in large overtime penalties if a subcontractor were to make an error when calculating overtime payments. The new interpretation should lessen the financial burden for companies that rely heavily on a subcontracted workforce.
A Look at the Courts
Although the DOL hopes the new rule will decrease litigation in the field, it remains unclear how much deference federal courts will grant the rule. Part 791 simply serves as the DOL’s official “interpretation” and guideline for enforcement of joint employer status under the FLSA. Therefore, courts are not mandated to follow the rule and only time will tell whether it receives widespread judicial support.
For the full article, click here.
Reprinted with permission from the February 6, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved.
Pennsylvania Business Central
Elizabeth A. Dupuis has been named to this year’s Pennsylvania Business Central’s “Top 100 People” list and profiled in its Signature Top 100 issue. Nominations were taken throughout the publication’s 24-county coverage area, and the final honorees were selected by a special selection committee for their professional and community contributions.
Betsy Dupuis has practiced law in Central Pennsylvania since 1997, most recently as Managing Shareholder at law firm Babst Calland’s State College office. Her practice focuses on real estate transactions, business planning and formation, commercial and contract litigation, estate planning and administration. She is also a licensed title agent in Pennsylvania and conducts commercial real estate closings through MidState Closing Company, a Babst Calland affiliate.
Among other honors, she is a graduate of Leadership Centre County and was recognized by LCC with the Community Leadership Association’s Distinguished Leader Award. She is the incoming chair for the National Association of Home Builders Legal Action Committee. She presently serves on the boards of the Centre County Chamber of Business and Industry (CBICC), the Central Pennsylvania Risk Management Association, and the Pennsylvania Builders Association. She is a past Chair of the Centre County United Way and the Palmer Museum of Art Gala.
She was recently re-appointed for a second four-year term as Solicitor for Centre County.
Top 100 People
The vibrant economic and social life of central Pennsylvania is powered by people. When goods or services are delivered in an efficient and timely manner, expertise and knowledge brought to bear on a problem, or necessary care provided, it’s not just the businesses and the institutions – but the people behind them that get the job done. We all know that powerhouse individual – the person with the vision, dedication and drive to not only complete the task, but to envision, expand and excel. We are fascinated by the impact a single individual can have on their workplace, their community and the lives of those around them. The stories of these individuals can provide instruction, inspiration and the motivation to raise our own standard of excellence. That is why we take great pride in bringing you Pennsylvania Business Central’s Top 100 People for 2020!
As always, we reached out to community leaders, local chambers of commerce, and you, our loyal readers, to identify those individuals whose unique contributions have set them apart as leaders. We received a wealth of nominations that reflect the rich diversity of central Pennsylvania and its business community. In selecting this year’s honorees, we wanted to show the full spectrum of leadership – from the small entrepreneur to the CEO of a large corporation – that helps shape our communities and our lives. And while every story is unique, we think you’ll find that these honorees share a dedication to hard work, dynamic leadership and the pursuit of excellence.
Many of you probably know some of these distinguished honorees. These are the people who run companies, volunteer in their community and raise families – they are our neighbors and our friends – the ones who give that extra effort that makes all the difference. We hope that you will enjoy learning about them as much as we did. We are proud to honor them.
As a companion to this edition, we are looking forward to our Top 100 Organizations signature edition, which will publish in February, celebrating the best in central Pennsylvania’s businesses, non-profits and brands.
For the full article, click here.
The Legal Intelligencer
(by Christian Farmakis)
Artificial intelligence (AI) is adding efficiencies and transforming businesses everywhere, and legal practices are no exception.
General counsels who are hiring lawyers need to understand that this technology is available now, so they can make sure their lawyers are leveraging the latest technology tools. AI can increase speed, increase efficiency and lower costs for clients—if the law firm has the right tools, but more importantly knows how to use those tools.
The following are some of the common questions about advancement of AI technology in the legal space.
• How is AI technology disrupting the legal industry?
AI is a term generally used to describe computers performing tasks normally viewed as requiring human intellect.
AI legal technology won’t replace lawyers, but these tools will drastically change the way lawyers provide services for their clients. While estimates vary, 23% to 35% of a lawyer’s job could be automated. As a result, lawyers will need to be more strategic and supervisorial, able to act as project managers and supervise the information being fed into systems, and knowledgeable about the assumptions underlying the machine learning algorithms.
So far, projects that classify data have been impacted the most, allowing projects such as e-discovery, due diligence, document management and research to be done faster and more efficiently.
Law firms can already pass these savings on to clients, but this is only the beginning of the transformation. Early law firm adopters are implementing artificial intelligence, machine learning and predictive analytics to legal contract review and document management, enhancing efficiency, intelligence and quality while reducing costs for clients.
For example, with the addition of artificial intelligence software, Babst, Calland, Clements and Zomnir can now deploy highly trained machine learning algorithms in its due diligence process resulting in faster, more intelligent contract or document review for clients. Whether the client has 100 or 100,000 documents for review, we can now rapidly review and identify key provisions within documents and agreements more quickly and accurately than ever before.
• What will be the next wave of AI legal technology?
The next generation, which is starting to hit the market now, will be document automation and legal research and writing tools, as well as predictive technology tools. For example, a contract can be put through an algorithm in order to identify how risky it is. It could be used to determine how likely it is to go into litigation or if it complies with the company’s internal contract procedures and policies.
Another use is analytic tools that can measure efficiency and pricing of the legal services. E-billing and practice management tools could measure whether a service contract should cost $2,500, not the $7,500 that’s being charged. In other instances, AI could help firms do estimates for alternative fee arrangements.
• Why is it so important for lawyers to use the right tool for the job?
AI technology is not going away. It’s here to stay, and it’s increasing exponentially. While the AI legal tech revolution is still in its infancy, the tipping point is around the corner. In 2016, the industry spent $8 billion on AI technology; that’s predicted to hit $46 billion by 2020.
However, many of these products are single-tasked products and not integrated tools that can perform multiple tasks. And many of the products’ pricing models do not yet meet the market needs.
While pricing adjustments are already starting to occur and integration should happen over the next five years, AI technology is nothing more than a tool. Just like other technology, purchasing the new tool is only a small part of what needs to happen to gain efficiency and lower prices. The organization has to be behind it, the employees need to know how to use it and the entire project must be managed properly.
For a variety of reasons, companies are demanding access to specialized services, greater efficiency and more insight from outside legal counsel, as well as more innovative resources to stay one step ahead in a time-sensitive, highly competitive marketplace. A state-of-the-art approach, along with a systematic process that applies artificial intelligence technology, provides clients with the latest, flexible solution customized to meet their specific legal and business needs.
Lawyers who have an open mind and an ability to use these new tools effectively are already passing cost efficiencies on to clients, and this should only increase in the future.
Babst Calland and its affiliated alternative legal service provider, Solvaire, is leveraging new AI technology and proven project management processes in its due diligence, discovery and document management projects resulting in faster, more intelligent contract or document review for clients.
Christian A. Farmakis is a shareholder, management committee member and chairman of the board of directors at Babst, Calland, Clements and Zomnir and president of its affiliated alternative legal service provider, Solvaire. If you have questions about the deployment of AI on large diligence, discovery or document management projects, contact Farmakis at 412-394-5642 or cfarmakis@babstcalland.com.
For the full article, click here.
Reprinted with permission from the January 31, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved.
Environmental Alert
(by Lisa Bruderly)
On January 23, 2020, the U. S. Environmental Protection Agency (EPA) and the U. S. Army Corps of Engineers (Corps) pre-published the final Navigable Waters Protection Rule (NWP Rule), which (yet again) redefines the scope of waters that are regulated under the Clean Water Act (CWA). In particular, the final NWP Rule revises the definition of “waters of the United States” (WOTUS) in 12 federal regulations and will become effective 60 days after publication in the Federal Register. Once effective, the NWP Rule will almost certainly be challenged in the courts by NGOs and other interested parties. These challenges could result in the courts staying the NWP Rule in some, or all, states while the lawsuits are litigated.
The NWP Rule is the final step in fulfilling the Trump administration’s promise to repeal and replace the Obama administration’s 2015 Clean Water Rule (CWR), which many believe improperly expanded the scope of waters regulated under the CWA. Effective December 23, 2019, EPA and the Corps repealed the CWR and restored the WOTUS definition that existed prior to 2015 (Pre-2015 Rule). Prior to the repeal, the Pre-2015 Rule’s WOTUS definition applied in approximately half of the states, while the CWR’s WOTUS definition applied in the remainder (including Pennsylvania), resulting in certain states having more federally regulated waters than other states.
The stated intent of the NWP Rule is to provide “clarity, predictability and consistency” regarding CWA jurisdiction. Consistent with the President’s February 28, 2017 Executive Order, the NWP Rule heavily reflects and relies upon Justice Antonin Scalia’s interpretation of the Pre-2015 Rule’s definition of WOTUS, as expressed in his plurality opinion in the seminal case, Rapanos v. United States (547 U.S. 715 (2006)). Missing from the NWP Rule is any reference to the significant nexus test discussed in Justice Anthony Kennedy’s concurring opinion in Rapanos. As background, Justice Scalia opined that relatively permanent, standing, or continuously flowing waters and wetlands with a continuous surface connection to such relatively permanent waters should be regulated under the CWA, while Justice Kennedy advocated for CWA jurisdiction for wetlands with a significant nexus to a navigable water (i.e., a significant effect on the chemical, physical and biological integrity of traditional navigable water).
Scope of NWP Rule is Narrower and Clearer than Previous Rules
The NWP Rule consolidates jurisdictional waters into four categories: (1) territorial seas and navigable-in-fact waters; (2) tributaries; (3) lakes, ponds and impoundments of jurisdictional waters; and (4) adjacent wetlands.
As expected, the WOTUS definition in the NWP Rule is much narrower, and will federally regulate less waters, than would have been regulated under the CWR. The NWP Rule also provides more clarity as to the scope of WOTUS than the Pre-2015 Rule. The NWP Rule includes sixteen definitions and twelve exclusions, as compared to the five definitions and two exclusions in the Pre-2015 Rule, including, for the first time, definitions to clarify the prior converted cropland and waste treatment system exclusions. The NWP Rule categorically excludes, among other things, ephemeral streams and ditches without perennial or intermittent flow.
We note that, despite attempts to provide clarity, the NWP Rule still contains terms that may be subjectively interpreted. For example, the Rule relies on conditions in a “typical year” to determine whether a water meets the definition of an “adjacent wetland,” “lakes and ponds, and impoundments,” or a “tributary.” Subjectivity is likely in making these determinations because a “typical year” is defined by the “normal periodic range” of climatic conditions in a geographic area based on a rolling 30-year period.
Practical Impact of NWP Rule is Uncertain
While the NWP Rule is intended to clarify the scope of federally regulated waters, the practical impact of the Rule for industry, developers, agriculture and others is uncertain. The effect of the NWP Rule is likely less in states with very inclusive definitions of state waters than in states with narrower definitions of the same.
For example, under Pennsylvania’s Clean Streams Law, “waters of the Commonwealth” broadly include “any and all rivers, streams, creeks, rivulets, impoundments, ditches, water courses, storm sewers, lakes, dammed water, ponds, springs and all other bodies or channels of conveyance of surface and underground water, or parts thereof, whether natural or artificial, within or on the boundaries of this Commonwealth.” Pennsylvania’s definition of “waters of the Commonwealth” is generally more expansive (i.e., includes more types of waters) than the NWP Rule’s WOTUS definition. Therefore, projects that are expected to impact, or discharge into, a water of the Commonwealth will still (typically) require state permitting, even if federal permitting may not be required. In some instances, Corps permitting may not be needed for impacts to streams or wetlands that would require a state permit. There may also be implications, in limited circumstances, as to whether Spill Prevention, Control, and Countermeasure (SPCC) plans would be needed for certain facilities.
In states with definitions of state waters that are the same or less inclusive than the NWP Rule, the Rule is expected to be a more significant consideration on projects that require permitting or spill planning/response.
Controversy Continues and Challenges are Expected
While many in industry and agriculture have supported the NWP Rule, a number of NGOs and other interested parties have signaled that they will challenge the NWP Rule on procedural and substantive grounds. In addition, the EPA’s own Science Advisory Board, and other scientific organizations, have criticized the NWP Rule as being in conflict with established science and the objectives of the CWA. With legal challenges looming, the NWP Rule may be stayed in some, or all, states, with the Pre-2015 Rule remaining the definition of WOTUS nationwide or in select states.
EPA and the Corps will hold a public webcast on the NWP Rule on February 13, 2020. Interested parties can register for the webcast at https://www.epa.gov/nwpr. Babst Calland has analyzed the evolution of the regulatory definition of WOTUS in numerous Environmental Alerts over the years (see www.babstcalland.com) and will continue to actively monitor this controversial regulatory issue. If you have questions about the NWP Rule or water-related matters in general, please contact Lisa M. Bruderly at (412) 394-6495 or lbruderly@babstcalland.com.
Click here for PDF.
The Legal Intelligencer
(by Ben Clapp, Varun Shekhar, Casey Snyder and Brianne Kurdock)
If a newly proposed rulemaking is finalized, the process by which federal agencies are required to analyze the environmental impacts caused by their actions could be comprehensively updated for the first time in over four decades. On Jan. 10, the Council on Environmental Quality (CEQ) published a notice of proposed rulemaking in the Federal Register to update its regulations implementing the National Environmental Policy Act of 1969 (NEPA). The proposed revisions seek to narrow both the scope of projects that must be reviewed under NEPA, as well as the nature and extent of such review. These changes are intended to reduce the time, cost and workload required to comply with NEPA, and could also make it more difficult for opponents of agency actions that seek to block those actions in court based on alleged NEPA violations.
Background of NEPA
NEPA, enacted in 1970, is a procedural law; it does not mandate substantive environmental outcomes. The purpose of NEPA is to promote accountability and transparency in federal decisions to ensure that environmental concerns are integrated into federal decision-making. The CEQ, a division of the Executive Office of the President, is charged with overseeing implementation of NEPA CEQ first promulgated regulations implementing NEPA in 1978.
NEPA applies to major federal actions significantly affecting the quality of the human environment, including those undertaken by nonfederal entities that receive federal funding or require federal permitting approvals. Federal agencies have three primary means of complying with NEPA. First, federal actions that have previously been determined to involve no significant impacts to the environment may receive a categorical exclusion (CE) from a more in-depth and time-consuming, review. Second, projects for which impacts are not expected to be significant or are unknown require the preparation of an environmental assessment, which identifies a project’s anticipated effects and assesses their significance. Third, projects with known significant environmental impacts require the preparation of an environmental impact statement (EIS), which is a lengthier document that analyzes adverse environmental effects from, as well as alternatives to, the proposed action. These are often required for, among other things, federal approvals for major infrastructure projects as well as for approvals of oil and gas leases.
The NEPA process allows for substantial public participation, including the right to challenge an agency’s NEPA analysis in federal court. Moreover, the extent of impacts to be considered in an EIS can change as scientific and social research develop, as evidenced by a recent focus on climate change and environmental justice impacts.
Proposed Changes to NEPA
CEQ’s proposed revisions to the NEPA regulations seek to create a more efficient and timely review process. The proposed changes would impact all aspects of the NEPA process, including fundamental components such as the application and scope of NEPA review, analysis of alternatives and timing requirements.
The most significant change proposed by CEQ is the revision of the term “effects.” Because NEPA requires a federal agency to analyze the environmental effects of its proposed action, revision of the definition of effects should correspondingly alter the required scope of an agency’s NEPA analysis. Under existing regulations, the term is defined to include all direct, indirect and cumulative environmental effects caused by an action. Collectively, this includes all effects caused by the action that occur at the same time and place (direct), effects caused by the action that are later in time or further removed in distance but still reasonably foreseeable (indirect), and effects that result from the incremental impact of the action when added to other past, present or reasonably foreseeable actions (cumulative).
The proposed definition removes reference to direct and indirect effects, revising the term to include those effects that are “reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternative.” The proposed definition explicitly eliminates the requirement to analyze cumulative effects. In addition, the proposed definition clarifies that a “but for” causal relationship is insufficient to trigger an agency’s responsibility to analyze a particular effect. Rather, the phrase “reasonably close causal relationship” is intended to eliminate effects that are remote in time, geographically remote or the product of an attenuated causal chain, as well as those effects which an agency has no authority to prevent or which would happen regardless of the agency action.
The proposed rule does not specifically address the extent to which an agency would be required to analyze effects from greenhouse gas emissions and potential climate change impacts, other than to note that any such analysis must be consistent with the proposed definition of “effects.” However, CEQ’s proposed draft guidance on consideration of greenhouse gas emissions, released last June, would give agencies latitude in determining when quantification and analysis of GHG emissions and their effects are warranted. CEQ solicits input on whether the proposed regulation should incorporate any aspects of this draft guidance.
The proposed rule also aims to provide clarity for determining whether a particular federal action triggers NEPA. Currently, NEPA applies to “major federal actions”—those with effects that may be major and that are potentially subject to federal control and responsibility. This includes an agency’s failure to act. CEQ proposes to strike “potentially” as well as the portion of the definition that relates to a failure to act, narrowing the definition only to affirmative actions that are clearly subject to federal control and responsibility. Further, the definition clarifies that loans, loan guarantees, or other forms of financial assistance in cases where the federal agency does not have sufficient control and responsibility over the effects of the action, are not within the scope of the definition.
Under the current regulations, an agency must analyze all reasonable alternatives, including those not within the jurisdiction of the lead agency. CEQ proposes to strike the term “all” from this requirement, allowing an agency to provide a reasonable number of examples that are technically and economically feasible. In addition, CEQ proposes to remove the requirement that an agency analyze alternatives outside of its jurisdiction.
The proposal contains a host of additional revisions aimed at streamlining the NEPA process. In particular, CEQ proposes to facilitate the use of CE’s by clarifying the process by which an agency can create an exclusion, and to allow agencies to establish procedures for employing CEs created by other agencies. These changes also include more practical components, such as establishing time limits for NEPA reviews (two years for Environmental Impact Statements and one year for Environmental Assessments).
Finally, CEQ has proposed revisions reflecting its goal of resolving allegations of NEPA noncompliance as expeditiously as possible. To that end, the proposed rule stipulates that the NEPA regulations do not create a presumption that a NEPA violation provides a basis for injunctive relief (although a court may still find that it is the appropriate remedy), and that harm arising from an agency’s failure to comply with NEPA can be remedied by the agency complying with the requirements in the proposed regulations.
The proposed revisions, if adopted as a final rule, would supersede all previous CEQ NEPA guidance, and CEQ anticipates that it would withdraw all CEQ NEPA guidance that is currently in effect.
Potential Impacts to the Regulated Community
The proposed revisions could have a significant impact on many industries, particularly energy generation and transmission. In prior years, NEPA requirements have delayed large-scale projects and allegations of deficiencies in the NEPA process are frequently raised by project opponents in efforts to block such projects. For example, in 2018, a Montana district court enjoined construction of the Keystone XL pipeline on the basis that the lead agency, the U.S. Department of State, violated NEPA by failing to evaluate the cumulative climate impacts of the project. The proposed rule’s changes to the definition of effects and potential incorporation of the draft GHG guidance arguably should give more flexibility to agencies in performing review of environmental effects and may make it harder for such issues to give rise to vacatur of agency approvals.
The presumptive time limits for NEPA review should also significantly reduce the current average timeframes for NEPA review by more than 75%. Moreover, the proposal’s limitations on the scope of judicial review could make it more challenging for projects to be blocked by courts as a result of NEPA deficiencies. For these reasons, among others, we note that it is unlikely that these provisions will be implemented without legal challenges from environmental advocacy groups.
Based on its likely impacts to such a wide variety of industries that require approvals, funding or other actions by federal agencies, developers of projects that are potentially subject to NEPA review and other stakeholders are encouraged to comment on the proposed rule. The deadline to submit comments is March 10, and two public hearings will be held, on Feb. 11, in Denver, Colorado, and Feb. 25, in Washington, D.C.
For the full article, click here.
Smart Business
(by Jayne Gest with Boyd Stephenson)
The trucking industry is still adjusting to the final transition to electronic logging devices (ELDs). Some relief may be on the horizon, however, as federal regulators consider whether to relax the hours of service requirements.
“Every solution has unintended consequences, and that is exactly what we are seeing now,” says Boyd A. Stephenson, associate at Babst Calland. “The supply chain is like a balloon, where everything is interconnected. You push on one part and another piece will pop out.”
Paper logbooks are left to the discretion of the driver, while ELDs record driving time automatically to ensure driving hours are strictly followed. The idea is to make the roads safer. Effective now, strict enforcement of the ELD mandate applies to all drivers, unless they operate under the short-haul rule exemption.
The trucking industry is dealing with rising transportation costs and an overall driver shortage in an economic expansion. Freight volumes also grew more slowly in 2019, with trade conflicts and tariff increases taking a toll on growth.
An American Transportation Research Institute survey found that the top industry concerns for 2019 were driver shortages, hours of service, driver compensation and detention or delays at customer facilities. These obstacles increase trucking costs, which get passed on to shippers that need their goods transported.
Smart Business spoke with Stephenson about hours of service rules and other industry changes that businesses should be aware of in 2020.
Why did the Federal Motor Carrier Safety Administration (FMCSA) feel a need to change the hours of service rules?
With ELDs in place, drivers cannot adjust their logs. Difficulties like wait time while cargo is loaded or unloaded, weather and traffic have highlighted the need to adjust the hours of service and let drivers spend more time on the road. Based on strong industry feedback, the FMCSA proposed more flexible hours of service in August, which it hopes will alleviate some industry challenges.
The agency proposes to:
- Extend the short-haul exemption, where drivers are not required to keep logbooks. As of now, to be considered short haul, a driver must drive only within a 100 air-mile radius, start and return to the same location with 12 hours of duty time, drive no more than 11 hours and have 10 consecutive hours off between shifts. The updated exemption would apply to those who drive 150 air miles and allow short-haul drivers to be on duty for 14 hours.
- Give more flexibility for driver breaks and sleeper berth requirements.
- Allow one off-duty break, lasting between 30 minutes and three hours, that would allow the driver to pause the clock on his or her 14-hour window.
The majority of truck traffic operates under the short-haul exemption, and more liberalized hours of service should have wide-ranging effects on the overall supply chain, such as flexibility and lower costs.
With the comment period over, the FMCSA hopes get a final rule out this year.
What is the Beyond Compliance program, and what does it mean for fleet operators?
Regulators also would like to implement the Beyond Compliance program, which would give incentives to fleet operators that adopt proven safety tools, technologies or practices, such as collision warning. With the comment period closing in February 2020, the final rules have yet to be determined. However, short-haul drivers that use ELDs and implement the Beyond Compliance program may have one incentive, as they will be more likely to be sent on their way if a roadside inspection site is busy. Compliance with this program factors into the carrier and driver history that is already considered.
Businesses with truck fleets should be proactive with safety technology, as these investments can pay off. Not only will adopting these technologies deprioritize a truck’s chance of getting inspected, but the resulting improved safety performance makes the truck safer, which also lowers the required inspection rate and factors into insurance costs.
For the full article, click here.
For the PDF, click here.
Environmental Alert
(by Ben Clapp, Varun Shekhar, Casey J. Snyder and Brianne K. Kurdock)
On January 10, 2020, the Council on Environmental Quality (CEQ) published a notice of proposed rulemaking in the Federal Register to revise regulations implementing the National Environmental Policy Act of 1969 (NEPA). These revisions could significantly affect projects in several industries, including infrastructure development, that require approval by federal agencies.
NEPA is a procedural statute that requires federal agencies to evaluate environmental impacts associated with proposed major actions. Major actions are actions subject to federal control and responsibility with potential significant effects. CEQ’s regulations that implement NEPA aim to ensure that environmental effects from such actions are considered before they are undertaken. These regulations have never been comprehensively revised since they were promulgated in 1978, despite statutory changes that provided for a more streamlined NEPA review of certain infrastructural projects. The Trump administration first signaled its intent to update the NEPA regulations in 2017, when it issued an Executive Order directing CEQ to review the environmental review process to enhance its efficiency, specifically for major infrastructure projects. In June 2018, CEQ published an advance notice of proposed rulemaking (ANPRM) soliciting comments on potential revisions to the NEPA regulations. CEQ considered those comments when developing the current proposed rule.
Summary of CEQ’s Proposed Changes
CEQ has proposed extensive revisions to its regulations in an effort to create a more efficient and timely NEPA review process. The proposed changes would impact several fundamental aspects of the NEPA process, such as the application and scope of NEPA review, analysis of alternatives, and timing requirements. Key proposed changes include:
- Revision of the term “effects.” This revision would alter the scope of an agency’s effects analysis under NEPA. Under existing regulations, the term “effects” is defined to include all direct, indirect, and cumulative (incremental) effects of an action. However, effects are not subdivided into these categories in the statute. In the proposed rule, CEQ proposes to include only those effects that are “reasonably foreseeable and have a reasonably close causal relationship to the proposed action or alternative.” This revision explicitly eliminates an agency’s obligation to analyze cumulative effects, as well as those direct or indirect effects that are remote in time or geography, or the product of an attenuated causal chain.
- Climate change considerations as “effects.” The proposed rule does not address the extent to which an agency would be required to analyze potential climate change impacts from greenhouse gas (GHG) emissions, but it does note that any such analysis must be consistent with the proposed definition of “effects.” Draft NEPA Guidance on GHG Emissions, released last June, would give agencies latitude in determining when quantification and analysis of GHG emissions and their effects are warranted. CEQ solicits input on whether the proposed regulation should incorporate any aspects of this draft guidance.
- Clarification of NEPA scope. Currently, NEPA applies to major actions that are potentially subject to federal control and responsibility. CEQ proposes narrowing the definition to major federal agency actions that are both affirmatively undertaken and clearly subject to federal control and responsibility. Loans, loan guarantees, or other federal financial assistance in cases where the federal agency does not have sufficient control and responsibility over the effects of the action would not trigger NEPA.
- Narrowing scope of alternatives. Under current regulations, a lead agency must analyze all reasonable alternatives, including those not within its jurisdiction. The proposed regulations would strike the term “all” from this requirement, allowing the agency to consider a more limited range of alternatives, including only those within its jurisdiction and that are technically and economically feasible.
- Streamlining the NEPA process. Under the proposed rule, agencies are encouraged to identify and apply efficiencies, such as the use of Categorical Exclusions (CEs), and adoption of prior NEPA, state, tribal, and local analyses, to avoid duplication of effort and unnecessary expense. Other proposed streamlining efforts include clarifying the process by which an agency can create a CE and use exclusions created by other agencies, implementing presumptive time limits for NEPA reviews (two years for Environmental Impact Statements (EISs) and one year for Environmental Assessments), and imposing presumptive page limits for EISs (300 pages). Agencies would be required to develop (or revise) their NEPA procedures and subagencies are encouraged to adopt their own procedures. This proposed change is significant because certain governmental agencies, such as the Pipeline and Hazardous Materials Safety Administration (PHMSA), do not currently have specific NEPA procedures and/or CEs.
The proposed revisions, if adopted as a final rule, would supersede all previous CEQ NEPA guidance, and CEQ anticipates that it would withdraw all CEQ NEPA guidance that is currently in effect.
Potential Impacts of Proposed Rule on the Regulated Community
The proposed revisions to NEPA, if implemented, would likely have a significant impact on several industries, particularly on privately developed infrastructure projects, including pipelines, electricity transmission lines, water resource projects, and communications infrastructure projects. For example, the construction of interstate natural gas transmission facilities requires a Certificate of Public Convenience and Necessity from the Federal Energy Regulatory Commission, which customarily serves as the lead agency for the NEPA review of such projects. Although these and other federal approvals are likely to trigger NEPA obligations under the proposed rule, revision of the term “effects” and the potential incorporation of the draft GHG Guidance into the NEPA rules are expected to expedite the environmental reviews, which in the past have contributed to costly delays for project approvals. In addition, the proposed rule could make it more difficult for project opponents to successfully seek an injunction based on alleged NEPA violations. Finally, the presumptive time limits for NEPA review would substantially reduce the current average timeframe for NEPA review (about 4.5 years), which would provide for more certainty to the business community when planning projects.
Next Steps
CEQ invites comments on a host of issues, and interested parties are encouraged to use this opportunity to comment on their experience with NEPA generally, or on issues specific to their industries or organizations. Comments are due by March 10, 2020, and public hearings will be held on February 11, 2020 in Denver, Colo. and on February 25, 2020 in Washington, D.C.
Babst Calland is actively monitoring this proposed rulemaking. If you have questions about how NEPA or this rulemaking could affect your operations, or how to comment on the rulemaking, contact Ben Clapp, Varun Shekhar, or Casey J. Snyder within Babst Calland’s Environmental Group, or Brianne K. Kurdock within Babst Calland’s Transportation Safety Group.
Click here for PDF.
The PIOGA Press
( by Megan Mariani and Nicholas Habursky)
The modern oil and gas industry is a complex and multifaceted operation involving significant upstream, midstream and downstream infrastructure. Well pads located on the surface are necessary to extract the oil and gas from the subsurface. A constantly expanding network of pipelines are required to transport the produced oil and gas from the well pad to places of market or refinement. This complexity requires a constant balance of property rights between surface owners and mineral owners and operators. One mechanism by which the parties balance property rights is through the use of easements. Easements can be created in several different ways, including through an implied easement by necessity which was recently addressed by the Supreme Court of Pennsylvania in Bartkowski v. Ramondo, No. 60 MAP 2018, 2019 Pa. LEXIS 6100 (October 31, 2019).
Implied easement by necessity
Before discussing Bartkowski, it is helpful to understand the elements of an implied easement by necessity. In Pennsylvania, for an implied easement by necessity to exist, three elements must be met:
- Title to the dominant and servient properties were once held by one person;
- This unity of title must have been severed by a conveyance of one of the tracts; and
- The easement must be necessary for the dominant owner to use the land, with the necessity existing both at the time of the severance of title and at the time of the exercise of the easement. An easement by necessity is always of strict necessity and not a mere matter of convenience.
Claiming an easement by necessity involves inherent risks. By definition, there is no document of record creating the easement or defining its scope. Therefore, it is not uncommon for the servient and dominant landowners to disagree as to whether the easement exists. Further, it can be very difficult to determine whether the strict necessity requirement has been met.
Bartkowski strict necessity analysis
In its Bartkowski decision rendered on October 31, the Pennsylvania Supreme Court offered useful guidance on determining whether the need for the easement by necessity is one of strict necessity.
In Bartkowski, the Supreme Court reversed an order of the Superior Court which denied the Ramondos an easement by necessity over the Bartkowskis’ property and remanded the matter for further proceedings. The court granted allowance of appeal to consider “whether a landowner must prove impossibility of alternative access…in order to establish an easement by necessity.” The majority opinion issued by the court held that a landowner need only show that that alternative access to their property is “manifestly impracticable,” but absolute impossibility is not required.
By way of background, the pertinent facts of the case were as follows. In 1991, the Ramondos purchased approximately 5.62 acres known as a “flag lot,” named as such because the shape of the lot incudes a narrow strip of land (the “pole”) that connects the larger “flag” portion of the lot to a public road, in this case Garrett Mill Road. In 2012, the Bartkowskis purchased a neighboring lot, containing approximately 5.25 acres, which is also considered a “flag lot” due to its shape. The Bartkowski pole and the Ramondo pole run parallel to one another. At issue in this case is a portion of the Ramondos’ driveway, leading from Garrett Mill Road to their home constructed on the flag portion of the property. The Ramondos’ driveway begins on the Bartkowski pole at Garrett Mill Road and extends approximately 300 feet on the Bartkowski pole until it crosses onto the Ramondo pole and continues on the Ramondo pole the remaining distance to the flag portion of the Ramondo property.
On July 16, 2015, the Bartkowskis filed an action in ejectment and trespass because of the portion of the Ramondos’ driveway encroaching on their property. At the trial, both the Bartkowskis and the Ramondos submitted their expert reports to the lower court. According to the Ramondos’ expert, “the current location of the Ramondo driveway is the only method to reach their home.” The Ramondos’ expert concluded that constructing a new driveway was not a viable option due to various prohibitive factors, including the topography of the Ramondos’ pole and the existence of environmental and zoning regulatory issues that would be difficult to overcome. The Bartkowskis’ expert, however, concluded that constructing a new driveway was “feasible” and that it was reasonable to expect that the Ramondos “could obtain the necessary environmental and zoning relief.”
Both the trial court and the Superior Court concluded that the Ramondos did not establish an easement by necessity since they did not “demonstrate impossibility and thus necessity.” The lower courts focused on the fact that while the Ramondos demonstrated that relocating the driveway would be difficult and costly, they did not prove that it would be impossible.
The first two elements of an easement by necessity described above were not in dispute on appeal. The only issue that remained for the Supreme Court to consider was whether the third element to establish an easement by necessity requires the landowner to prove impossibility of alternative access.
The majority held that it does not, stating that “to require a party to prove utter impossibility of alternative access is to stretch ‘strict necessity’ beyond its intended meaning.” The court reasoned that in this day and age with modern technology and unlimited resources at a party’s disposal, most obstacles to alternative access could be overcome and therefore never truly impossible. As a result, requiring impossibility to prove “strict necessity” would be an “unworkable standard.”
Determining whether “strict necessity” has been established is a fact-specific inquiry. Pennsylvania courts require that a landowner demonstrate more than “mere convenience” to claim an easement by necessity. However, Pennsylvania jurisprudence does not provide any express definition or formulation of the “strict necessity” standard. The court was persuaded by other jurisdictions’ interpretations of “strict necessity” which focus on the reasonableness and practicability of the alternative access, rather than impossibility.
The court also found parallels in Pennsylvania’s Private Roads Act. The act allows a landowner to petition the court to establish a private road over a neighboring property in order to access their property and requires a finding of “strict necessity.” In examining the case law surrounding the “strict necessity” standard under the Private Roads Act, the court concluded that Pennsylvania has “rejected the proposition that necessity only exists where access to the property is literally impossible.”
Focusing on reasonableness and practicability, the court provided a non-exclusive list of factors to be considered when evaluating the necessity of the easement under the “strict necessity” standard, including, but not limited to:
- The existence of zoning restrictions and the likelihood that the party can obtain the necessary variances or exceptions;
- The existence of state or federal regulations that prohibit certain uses of the land in question, the topography of the land and the practicability of constructing alternative access;
- The environmental consequences of construction;
- The costs involved; and, of course,
- Whether and to what extent these impediments existed at the time of severance.
The court emphasized that these factors are not meant to be a bright-line rule and that the existence of these factors in any case is not a guarantee that an easement by necessity has been established, but they should be useful in navigating the gray area of “necessity” going forward.
Broad scope of Bartkowski analysis
The analysis in the Bartkowski case provides oil and gas operators with a useful framework in determining whether, in the absence of an express easement in writing, their actions are strictly necessary. The strict necessity framework set forth in Bartkowski could also be applied to other legal constructs used to determine whether an operator’s actions are appropriate and permissive. In laying out a non-exhaustive list of factors for evaluating an asserted necessity, the Bartkowski case can be applied to issues involving the prudent operator standard or accommodation doctrine, for example. Although Bartkowski does not specifically address such principles, it does provide an operator with possible guidance as to how a Pennsylvania court may attempt to balance a conflict between the rights of adverse property owners, including surface owners, mineral owners and operators.
Click here for PDF.